It is no secret that things are tough financially and the forecasts aren’t optimistic it will get better any time soon. Some people are still trying to recover from the impact of the pandemic that is ongoing. Inflation has hit household budgets hard. Energy costs have caused such a drain to budgets that some are trying not to turn on their heat unless it is a matter of life and death, and unfortunately it is expected that energy costs will be rising again in Spring. Another financial strain has been rising interest rates. 

The Bank of England’s Monetary Policy Committee (MPC) has increased the standard base rate during each of the last nine consecutive meetings. The next meeting is in February and another hike will likely occur in response to the current inflation level which is in double digits and far from the Bank’s target of 2.0%.

Before the first meeting that began the continuous rate hikes, the base rate was at an all-time historic low of 0.1%. One year later, in December 2022, the rate had reached 3.5%. Of course, this is the MPC set rate and interest rate offers from lenders are higher. 

Higher interest rates have been a concern of experts fearing those holding large value loans could have affordability issues arise. One such group, are homeowners. Many purchased their property when rates were at historic lows, not only historically low as far as the Bank, but also lenders reached historically low offers in the last two years which amounted to very cheap borrowing.

In the coming months, millions of homeowners are due to come to the end of their mortgage term. They will be leaving behind their very affordable interest rate for a choice between a remortgage or being moved to their lender’s standard variable rate (SVR). A SVR is risky when rates are rising as the lender could increase the rate and therefore increase the homeowner’s repayments quickly in response to the MPC and do so as each increase occurs. Only those with budgets able to absorb fast increased expenditures to their household budget should consider a SVR. 

Rather than accept a SVR, a homeowner could remortgage at the end of their mortgage term. A remortgage is typically attached to lower interest rates than a SVR, so savings could be found right away from the SVR. Also, a fixed rate remortgage could lock in the interest rate chosen and protect the homeowner from any further rate hikes, which again is another way to save money.

The ability to lock in a current interest rate is so attractive to some homeowners they are taking on penalty fees to end their term early. Doing so allows them to remortgage at current rates rather than the possibly higher rates that could exist when their term was due to end.

It is a smart strategy to consider a remortgage no matter where a homeowner is in their term. It takes only minutes to obtain a quote online to determine what savings are available. Most remortgage lenders offer quick quotes online. Going from one lender website to another will help the homeowner gather quotes to compare. It is a one-stop online shopping experience to get quotes from remortgage brokers. A homeowner could get numerous quotes from a variety of lenders at one broker website, and perhaps exclusive deals lenders do not offer directly to borrowers.

Once a homeowner has quotes in hand to review, they can discover what savings are available and determine what action to take. For homeowners on a SVR, it is highly recommended to shop for a remortgage. Others should as well, to prepare for when their current term will end and make a choice as to whether to act soon, in the near future, or later.

Experts remind homeowners that now is not the time to remain loyal to your current lender. Savings are important and being loyal could have a homeowner missing out on a deal offered by a different lender whether directly or through a broker. 

While saving money is the top reason to remortgage, there are other benefits as well, including turning built up equity into cash. With an equity cash release remortgage, a homeowner could secure a new deal, lock in a fixed rate to protect against further rate hikes by the MPC and put cash into hand. The cash could be used for any need the homeowner desires. Some have used the money to upgrade and improve the home, such as making the home more energy efficient, which in turn is another way to save. Others have used the money to consolidate debt, to build an emergency fund, or to pay for important expenditures.

There are opportunities to find savings despite the current financial strains, and for homeowners a remortgage could be a big opportunity not to be missed. When it is so quick and easy to shop for a remortgage online, it’s a great task to put on the top of a homeowners’ New Year priority list, for saving money is surely a top goal for 2023.